Concerns about privacy and anticompetitive behavior are incentivizing politicians on both the left and the right to go after the large tech companies that have dominated U.S. consumer life for the past decade. President Trump has long been a critic of companies like Amazon (AMZN, Financial), Alphabet (GOOG, Financial), Apple (AAPL, Financial) and Facebook (FB, Financial), arguing that they should be sued for their monopolistic behavior.
On the other side of the aisle, Senator Elizabeth Warren recently renewed her call to break up big tech by putting up a billboard in San Francisco, right in the heart of the industry. An antitrust law professor by education, Warren is intending to use this as a platform to differentiate herself from the mass of Democratic presidential candidates.
What is the problem?
A growing number of both Democrats and Republicans agree the tech giants have acted in an anticompetitive manner, that they have used users' private data for their own profit and could even be impacting democracy in pernicious ways. In an age of widening political polarization, this unity is striking - on what other issues do Ted Cruz and Warren align?
Not everyone agrees there is actually a problem. In a recent interview with CNBC, billionaire investor Stanley Druckenmiller (Trades, Portfolio) lambasted politicians for their attacks on big tech, saying: “We are attacking our companies that are the leaders in this stuff [artificial intelligence]. But man, it’s great. We are supporting our steel industry, our coal industry, our aluminum industry. Way to think about the future, President Trump, just genius”.
Regardless, what matters is not whether there is a problem (and I have argued that there is, at least with Amazon), what matters is that Washington thinks there is a problem.
Would it work?
Maybe. There are a number of problems with leveraging the existing regulatory framework against the tech giants. For one thing, it is hard to define what a breakup would even look like. Spinning Whatsapp and Instagram off of Facebook is one thing, but how does one split up Facebook itself? Its difficult to see how one could take apart the core platform without killing the product.
Unlike telecoms or industrial companies, which can be neatly divided by geographic area, technology companies integrate the software of acquired companies into their own tech stacks. As a result, "breaking up" the tech giants may not be as straightforward as some think. An additional problem for would-be trust busters is the sheer size and power of these companies. The enormous sums of money wielded by people like Jeff Bezos and Mark Zuckerburg make reeling them in a tall order.
With all that being said, it appears that there is a growing groundswell of support for at least some increased regulation of big tech. With politicians from both major parties, as well as the president, voicing their opposition to their business practices, Bezos and company may have a fight on their hands.
Disclosure: The author owns no stocks mentioned.
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